Legal Theory Lexicon 062: Path Dependency

Introduction

The phrase "path dependency" is used to express the idea that history matters--choices made in the past can affect the feasibility (possibility or cost) of choices made in the future. This entry in the Legal Theory Lexicon introduces this idea to law students, especially first-year law students, with an interest in legal theory.

The General Idea of "Path Dependency"

The general idea of path dependency is that prior decisions constrain (or expand) the subsequent range of possible or feasible choices. That is, a decision, d, made at a time, t1, may affect the choice set, S = (c1, c2, . . . cn) at t2. We can define a choice set as a set of actions that a given agent could take. Or to expand the path metaphor, if we imagine a network of paths through time, from past to future, decisions to branch at an earlier point on the chosen path may affect the destinations that one can reach from a later point on the path. Sometimes, if we choose the left fork, we may be able to reach exactly the same destinations we could have reached via the right fork, but sometimes, our choices foreclose some possibilities altogether. It isn’t always the case that in the long run, there’s still time to change the road you’re on.

The notion of path dependency is associated with the discipline of economics and also with political science. In the context of economics, there is a tendency to associate "path dependency" with effects on the costs of various options. But the phrase "path dependency" can be (and is) used in a more general sense--to encompass the ideas of feasibility and possibility. The terminology doesn't matter for its own sake, but it is important to be clear about the meaning of the phrase when discussing the ideas that are called "path dependency."

Specifying Path Dependency

This general notion of path dependency can be specified in various ways--(1) by the type of effect, (2) by causal mechanisms, and (3) by remediability. Each of these ideas requires further explanation.

The Type of Effect First, we can specify the type of effect that d1 has on the choice set. One type of seffect is an effect on which actions are members of the choice set. Thus, by making a decision d at t1, the resulting choice set at t2 would have members c1, c2, and c3, but if the decision had been d′ (d prime), then the choice set at t2 would have members c1, c3, and c4. In this illustrative case, making decision d rather than d′ both added and subtracted from the choice set at t2. Another type of effect is an effect on the costs associated with the actions that are members of the choice set. That is, decision, d, might result in the price of a given choice P(c1) being greater than that price would have been if an alternative decision, d′, had been made. Notice, however, that if we include price in the specification (or description) that designates a choice, then the second type of effect (that is, cost effects) are reducible to the first type of effect (possibility effects).

What Causal Mechanisms? A second way in which we can specify the general notion of path dependency is to describe the causal pathway by which decisions affect future choices. On the one hand, one might use the phrase “path dependency” to refer to all causal mechanisms. On the other hand, we could reserve the phrase for a specific type of causal mechanism. For example, Paul Pierson has suggested that the notion of path dependency should be limited to what he calls “positive feedback.” Positive feedback (or self-reinforcement) involves the idea that as time progresses, the relative benefit of maintaining some feature of the system (and hence the relatively costliness of modifying or eliminating that feature) increases. Once a constitution has been adopted and gone into effect, it becomes more costly to adopt a different constitution. Once a federal system has been created out of sovereign subunits, it becomes more costly to eliminate that the federal (or national) government. Once a judicial precedent has been established and relied upon, the costs of reversal grow.

Remediable and Nonremediable Path Dependency A third way in which we can specify the idea of path dependency is by differentiating between “remediable” and “nonremediable” path dependency. Path dependency is remediable if there are some points on the path at which there is an alternative decision, d′, such that if the decision had been d′ rather than d, the outcome would have been better (relative to some goal or criteria for evaluation). Path dependency is nonremediable if no alternative could have improved the outcome. For the idea of nonremediable path dependency to be plausible, we must assume that we are talking about particular choices in relationship to particular consequences within some time frame. Thus, the framers’ decision to create equal suffrage in the Senate might be nonremediable with respect to the goal of establishing majoritarian democracy if all of the alternatives (say, vetoes of national legislation by a single state governor) had been worse with respect to this goal.

Applications in Normative Legal Theory

Path dependency interacts with legal theory in a variety of ways. One simple example--stare decisis--is described by Oona Hathaway:

Path dependence theory is relevant to the common law system for a simple reason: the doctrine of stare decisis. Under the doctrine of stare decisis et non quieta movere--"let the decision stand and do not disturb things which have been settled" --decisions of higher courts are controlling in subsequent cases involving similar circumstances. Courts also give their own prior decisions great weight, though they are not strictly bound to follow their own precedents. Furthermore, even when decisions of other courts are not explicitly binding, they can provide persuasive authority. Judges who follow the doctrine thus generally apply decision rules that entail explicit reliance on earlier choices and thereby generate path dependence.

Another example is provided by a recent article by Lucian Arye Bebchuk and Mark J. Roe. They argue that initial decisions made about the form of corporate organization create path dependencies--making changes in form more costly or infeasible. And a final example is provided by Article V of the United States Constitution. Article V makes amendment difficulty by subjecting amends to a supermajoritarian process of proposal and ratification. Once the Constitution of 1789 had been adopted and gained legitimacy, "path dependency" made substantial changes without supermajority support infeasible.

Conclusion

The idea of path dependency is now a familiar one to many legal theorists, but its use in academic legal discourse is frequently vague or ambiguous. I hope this brief introduction will give you a more precise sense of what is meant by "path dependency."